Federal assistance for small businesses ran out last week, leaving many business owners who have spent the past two weeks navigating a Byzantine application process without any guarantees of assistance.
Under last month’s Cares Act, Congress allocated $ 349 billion to the paycheck protection program and an additional $ 10 billion to distribute $ 10,000 in economic disaster loans. Disaster loans can be used to pay rent and other expenses, and business owners must use 75% of their paycheck protection loans to keep employees on the payroll.
The Small Business Administration announced last Thursday that it no longer had funding for the two programs. Local small business owners said that while they relied on paycheck protection loans to help pay their employees, neither program covered one of their most critical expenses – rent.
Brooke Rodd, who owns two shops on Ocean Park Boulevard, said the Small Business Administration disaster and the paycheck protection loans she requested last month would not be enough to keep her from taking on debt. .
If she receives them, Rodd said she could only spend about $ 17,000 of the $ 50,000 in rent she feels she owes her landlords after the pandemic ends. Santa Monica has placed a moratorium on residential and commercial evictions during the pandemic, but tenants must make up any unpaid rent within six months.
“I understand the government’s plan is to put money back in the pockets of Americans to help support our economy. It helps my employees, which is great, but they already perceive unemployment, ”said Rodd. “It doesn’t help small business owners, who come out with massive debt and no way to pay it.”
Even before the money ran out, small business owners ran into obstacles when maneuvering their apps, which their banks made more convoluted.
Lana Negrete, co-owner of Santa Monica Music Center, a musical instrument store that also offers music lessons, said banks refused to help her apply for a loan or forced her to provide information ranging beyond what the SBA needs to disburse loans. .
When the paycheck protection loans became available, Negrete went to the typical Santa Monica Music Center bank, US Bank, who told him she was not ready to administer the paycheck protection loans. paychecks. Three other banks she tried told her she couldn’t get a loan without a checking account.
She returned to the US Bank, which said it was ready to accept applications, but only from individual business owners. (Negrete co-owns the business with his father, who founded it 49 years ago.) The bank also asked him to provide information about his personal income and savings accounts.
When she tried to ask for help, she was told that bank officials weren’t allowed to answer questions about paycheck protection loans and were directed to a hotline with a period. 72 hour wait.
“Banks have had the freedom to set eligibility conditions and add layers of issues and documents that have nothing to do with securing the loan,” said Negrete. “The involvement of the banks created more obstacles than if we went directly to the SBA.”
Negrete ultimately filed a request, but the U.S. bank informed her on Thursday that it had not been able to process the request until federal funds were exhausted.
The only help Negrete was able to get was from a GoFundMe campaign, which she used to pay multiple employees. Some customers have bought online music lessons and rented instruments, she added.
“When something like this happens, we trust the government, and they are not there for us,” she said.
In addition to selling musical instruments and lessons, the Santa Monica Music Center provides instruments to the Santa Monica-Malibu Unified School District and offers free lessons to low-income students through the Santa Monica Education Foundation.
Negrete said the center was accepting new business from UCLA and the Los Angeles Unified School District before the pandemic, but may have to close without another federal aid program that can be used to pay rent. She estimates that she will have to pay $ 42,000 in rent arrears six months after the stay-at-home orders are lifted.
“If we close, we will have to collect all the SMMUSD instruments to pay our debts to the bank,” she said. “It’s so surreal. We were on the rise… and it’s just going to destroy us. “
Amy Robertson, co-owner of TREATS Frozen Yogurt and Dessert Bar on Ocean Park Boulevard, also said she was unsure how she would pay the rent back within six months.
“I am so happy that Santa Monica has created a moratorium on evictions. If they hadn’t, we should have looked at each other, locked our doors and walked away, ”she said. “But how the hell am I going to make this money?” “
Robertson said she received no federal assistance before the CARES Act funding expired last week. According to a report released Tuesday by the SBA, half of the $ 247.5 billion in paycheck protection loans that have been approved went to companies asking for more than $ 1 million. Fifteen percent of the funding went to borrowers asking for $ 150,000 or less, who made up 70% of all loan applicants.
“From what I hear from small business owners, I haven’t heard of anyone who is relieved,” she said. “It is as if we are back in the financial crisis, where only large companies are relieved.”
Rodd said the government must provide rent assistance or rebate to small businesses or their owners. Under a recent addition to the Santa Monica eviction moratorium, a landlord cannot evict a tenant who failed to pay rent during the pandemic if the government has already compensated the landlord for the unpaid rent.
Otherwise, said Rodd, only large companies will be able to survive.
“There hasn’t been anything meant to save Main Street yet,” she said. “Small businesses are what make our communities unique. I don’t want to live in a world of Chili’s and TJ Maxx.